Hat Tricks - a Conflict of Interests?

A "hat trick" is an expression coined in the game of cricket. A game renowned for its genteelness and fairness. It is now used more widely to describe any three consecutive achievements or successes. I fear that in Gibraltar it can be used today to describe a fast developing and spreading practice: the wearing of different hats to justify, rather than to avoid a conflict of interests!

It has always been the accepted practice that if one wears more than one hat, then in order to avoid a conflict of interests arising, one would choose the hat to run with and discard all other hats. Things have changed. Today officials and professionals feel free to decide and act wearing different hats with impunity, in the belief that by donning a different hat and taking decisions and acting temporarily with one hat before donning another, a conflict of interest is avoided.

Different hats has become an excuse or justification as opposed to a warning light for a conflict of interest to be avoided. What an odd world we live in in Gibraltar! In truth those wearing more than one hat and acting at different times with different hats should pause and think for a while. These arrangements have a habit of resulting in unwanted and adverse consequences.

The affairs of Marrache & Co, its partners and associated companies may yet have other unwanted repercussions, if people continue swapping hats. Then, indeed, the phrase "hat trick", in Gibraltar, could take the different meaning suggested and it will not describe a success or achievement but rather a failure.

Conduct of Lawyers

It is possibly a little known fact that by section 33(2) of the Supreme Court Act all rules of conduct of the Bar Council and Law Society of England and Wales apply to barristers and solicitors in Gibraltar. All lawyers in Gibraltar, whether trained as barristers or solicitors in England and Wales, are called and admitted in Gibraltar and may practice as both barristers and solicitors.

At one time there was a debate amongst lawyers as to which code applied to whom. The Bar Council at least 10 years ago clarified this in a circular sent to all lawyers. The circular made clear that, to the extent that a lawyer was acting in a capacity not covered by one code, then the provisions of the other code would apply, whether that person was a barrister or a solicitor. In brief, what dictated which code applied was the nature of the work being undertaken and not the qualification obtained by any individual lawyer.

Irrespective of the complications that any individual lawyer may wish to raise in order to ignite once again the debate referred to above, what is absolutely clear is that the code of conduct of both branches of the legal profession have a certain core commonality that no lawyer can ignore or avoid.

Both codes require:

1. the rule of law to be upheld;
2. the proper administration of justice to be upheld;
3. integrity;
4. independence;
5. the maintenance of the best interests of clients (subject to the duty owed to the court);
6. the provision of a good standard of service;
7. that the public trust in the profession should not be diminished.

Recent events (without prejudging any outcome) have focussed minds on the profession. It behoves all lawyers to be aware of the above core principles and abide by them. It is also a fundamental rule of behaviour that incentives, monetary or other, should not be paid by lawyers to attract business. This is not only a rule of the professions but also a fundamental ingredient of the requirement to remain independent.

The legal environment will change post-Marrache (again without prejudging and whatever the outcome). Unless the profession can show that it is capable of regulating and supervising itself, which will prove difficult in the current circumstances, an independent regulatory and supervisory body may be imposed. Such a solution carries with it the dangers of the loss of or a diminution in the independence of the profession, which in turn has major adverse consequences on the public at large, the administration of justice and access to a fair justice system.

There are stormy waters ahead for the legal profession. It should remain vigilant to act within the codes of conduct and to involve itself actively in resolving the undoubted void that exists in the supervisory and enforcement aspects of conduct rules.

Information in Gibraltar - Freedom or Restriction?

This week the Gibraltar Chronicle reported on a debate between the Chief Minister and the Hon. Gilbert Licudi about information of companies and individuals prosecuted over unpaid taxes and social security being placed in the public domain.

It is odd (to understate the position) that the Chief Minister should use an argument based on the separation of powers to justify non-publication of this information to Parliament. One of the foundations of an independent judicial system is precisely that all hearings should be held in public: so all information used is public information.

Any prosecution of any individual or company is public information: perhaps what was being kept from entering the public domain is information relating to who was benefiting unfairly by not being prosecuted!

The right of the public to information is a much wider debate. In fact the constitution provides " ... no person shall be hindered in the enjoyment of his freedom ... to receive ... ideas and information without interference ..." In virtually every democratic country there is freedom of information legislation. In England there is the Freedom of Information Act 2000.

In Gibraltar no law exists giving the citizen the right to information held by Government (beyond the very specific rights granted by the Data Protection Act). Government goes about its business without fear that it may be required to give information to its electors that might lead to criticism. The unfairness of the protection that this affords public servants is unconscionable at any time but more so in this day and age.

When will we be granted the same rights that are the norm for any other citizens in most parts of the democratic world?

Regulation and Supervision of Lawyers

There is little doubt that the item that is dominating the news is recent events surrounding the law firm of Marrache & Co and the suspension of its two principals Isaac and Benjamin Marrache. It is important to respect the individual rights of both of them and also the companies involved and allow due process to take its course.

It is evident from these recent events, however and irrespective of the outcome of that specific matter, that Gibraltar's legal profession has to be dragged in the field of regulation and supervision into the 21st century . The regulatory and supervisory systems (such as they are) presently in place are antiquated and inadequate. Discipline over the profession is exercised by the Chief Justice. No doubt the right steps will be taken now and improved systems put in place.The danger is that there will be an overreaction that will precipitate the implementation of a system that will undermine the basic principle that the legal profession should be seen to be and be independent of government.

Lawyers are officers of the court and so, not only do they owe a duty to do the best by their clients as instructed (within and subject to carefully developed rules), they also need to take care that justice is done. Overpowering regulation and supervision that is not independent of government will undermine civil rights. This would be a major retrograde that would impede access to a fair system of justice.

Lawyers must remain vigilant, cautious and united to ensure that they safeguard their independence, yet do not do so at the expense of an improved regulatory and supervisory regime.

Who am I?

There is only one reason that this blogger wishes to remain anonymous for the present. It is certainly not fear that if the identity becomes public there may be retribution and recrimination. This blogger has written openly in the past expressing by far more controversial views in the Gibraltar press.

The reason these blogs are not attributed is in the hope and belief that they will be read objectively without the subjective influences that, in Gibraltar, often overwhelm and prejudice views expressed if and when the writer is identified. In Gibraltar we all think we know everyone and that knowledge, and the prejudices attached to that knowledge, often influence the interpretation attached to anything written by anyone.

The identity of this blogger will be made public on some future date at a time when, hopefully, the subjectivity that will result will be greatly reduced or eliminated... and please do not believe any rumour you might hear as to the identity of whom it might be that is writing this blog. It could be more than one person ...

Scandal in the Finance Centre

An anonymous person has commented that something should be written about recent events involving the Marrache law firm in this blog.

It is impossible and also dangerous to write any specifics about a fast developing situation, where all the facts are not yet known and whilst due legal process is pending. It is possible to write about wider issues and considerations that should have been and, in future, be taken into account, if the worst fears about this situation are borne out, or if they are not, on this occasion, were they to be borne out on another.

Incidents of this type bring into sharp focus the stresses and strains that are inherent in the regulatory and other governmental institutions of a small territory like Gibraltar. It is difficult for such a small entity to have the resources required or expected to meet and match the rigorous standards that are expected in Europe today, in the instant case, affecting the legal profession and finance. It is just an example, however, of a far wider problem facing Gibraltar's governance and institutions. Gibraltar is simply too small to generate the resources, both human and economic, required to provide the safeguards insisted upon by European and international requirements and, also that its own people should be demanding, as a scandal of this type affects Gibraltar's entire economy and so each and everyone.

The problem is clear, what about the solution? A solution is not simple but what certainly does not help to resolve the problem, but actually exacerbates it, is the headlong rush that our politicians have embarked on to "Gibraltarianise" (sic.) all its offices, posts and institutions. Political expediency or pressure should not dictate this process. Ability, the need for independence, knowledge, experience and fitness for post and job are all matters to be taken into account. Additionally where economies of scale cannot be achieved, then Gibraltar should contract services and expertise in from sources that can provide the necessary standards, checks, balances and safeguards required.

Politics, political expediency and pandering to populist but badly thought out ideals are not the only consideration when attempting to achieve good governance and regulation. Ability to deliver the expected (to internationally established standards) service levels should be the measure by which governments implement the necessary regimes. This has not been and is not the case in Gibraltar. The reality is that we try and get away with what we can and hope for the best. This is no longer good enough nor what is expected.

Any scandal, including the present one (whatever the eventual outcome), has substantive and wide ranging political repercussions that will need to be analysed, faced and resolved. Is Gibraltar inherently a large enough political unit to manage it and diminish the chances of re-occurrences? Or, should we be thinking of alternative political arrangements (without compromising the constitutional devolution achieved already by Gibraltar) so that it can deliver what every territory is expected to deliver both in the fields of good governance and good regulatory practice?

The answer could lie in joining forces with a larger geographic territory that can provide the required resources and economies of scale. If Gibraltar does not there could be a heavier and more unpopular political price to pay in the future and an even more onerous economic one.

Anonymous - Use a Pseudonym

Someone has made the point that all comments are being made as "anonymous", which is very confusing.

Anonymity can be maintained whilst at the same time knowing that different people are making comments if people adopt pseudonyms.

I would encourage people to take up this practice.

The Rule of Law or Consensus Law Enforcement?

Unbeleivably, it seems that the Chief Minister needs the help of the Chamber of Commerce, the Gibraltar Federation of Small Businesses and Unite, the trade union, to give him ideas on how to enforce the laws of Gibraltar. He makes the admission (see: Gibraltar Chronicle article) that tax and employment laws are being flouted and he seeks help to resolve the failure to enforce the law. These breaches of the law are known by many to have been happening for a long time. Their effects, which the Gibraltar Chronicle summarizes as being unfair competition and the pernicious consequences on employees, is well known.

The responsibility, indeed the obligation,to resolve this blatant disregard of the law lies with the government. It is it that is responsible for ensuring that the rule of law is maintained and that public servants charged with enforcement do their work efficiently and effectively. If these departments need to be resourced let the government do that. The resultant increased revenue from both social security and tax will cover the additional cost of this resourcing. What needs to be avoided is additional resourcing that will result in added cost followed by inefficiencies that do not translate into increased revenue.

On the subject of tax, whilst persons not on PAYE may have greater flexibility (read the ability to delay payments), this alone is not the main cause of the problems under discussion. Collection of PAYE is still not so efficient such that tax leakage is wholly prevented . There are frequent reports of companies declaring bankruptcy with large amounts of PAYE (and also social security contributions) remaining unpaid. The priority given to these payments when a distribution on the winding up of a company takes place works unfairly on all other creditors if, as is often the case, inefficiency has led to increased liability with that priority, thus denying other creditors of any recovery or reducing their recovery.

There is no need to have quarterly returns to improve collection of tax from those who are not on PAYE. A system of monthly self-assessment with payment of the monthly amount due within 15 days (as is the case for PAYE) would improve government's cash flow and reduce its risk of non-collection. On submission of an annual tax return the necessary adjustment could be made.

Why then has the Chief Minister so publicly called this meeting? The explanation could be that he knows what the negative effect that proper enforcement by the political government might have on its electoral chances. He may wish to mitigate this by his attempt to bring all the mentioned representative bodies into account by seeking their advice.

The direct impact of unpopular decisions of this type on the electoral fortunes of a political government are self inflicted. It arises from continual intermeddling in purely administrative matters that should properly be undertaken by civil servants. True, that where the civil service fails, the political government has to answer for that failure. If changes are made to return to a system in which the civil service undertake efficiently and properly their legislative duties and responsibilities and the political government empowers them to do so, then any electoral repercussions on the political government would be reduced. This would have the salutary effect of a return to good governance but the civil service also have to be made fully accountable for any failings and that accountability must be enforced without exception.

A Gibraltar Born Chief Justice

The appointment of the Hon. Anthony Dudley CJ as the first Gibraltar citizen to hold the office of Chief Justice is certainly newsworthy. What remains to be announced is for what period of time he has been appointed

An appointment under Section 64(1) of the 2006 Constitution would be until he is 67. This raises the specter of too long a term in office by the same individual. A fear already expressed in an earlier blog: "Judging Judges". A person who is too long in post can lead to negative consequences that are best avoided.

An appointment under Section 64(7) can be for a term certain. There is judicial authority for the proposition that too short a term undermines judicial independence. The leading authority on this point is Starr v Procurator Fiscal, which held that generally a term of 3 years is too short.

If this is what has been done, rule 9 of the Guide to Judicial Conduct of England and Wales prohibits someone who has been a judge from returning to practice privately as a barrister or solicitor. Is this prohibition to be applied in Gibraltar? If not, why not? If it is, what will someone like the Hon. Anthony Dudley CJ, who has achieved such high office so early in life, do upon his retirement from office?

I wonder whether a typical compromise solution will be found for Gibraltar, like ignoring rule 9 cited above, and whether that will be excused on the basis of its small size? How long can we carry on relying on this excuse without actually realizing that, applying objective internationally recognized standards, Gibraltar has to find other solutions rather than compromising at all times for purely nationalistic and political expediency.